OTHER

GIVEN TRADE
RECEIVABLES
Trade accounts receivable 1,550,000 1,550,000
Trade accounts receivable, assigned (proceeds 750,000 750,000
from assignment amounted to P650,000)
Trade accounts receivable, factored (proceeds
from factoring done on a without-recourse basis 300,000 -
amounted to P250,000)
12% Trade notes receivable 200,000 200,000
20% Trade notes receivable, discounted at 40%
upon receipt of the 180-day note on a without 300,000 -
recourse basis
Trade receivables rendered worthless 50,000 -
Installments receivable, normally due 1 year to 600,000 600,000
two years
Customers’ accounts reporting credit balances 60,000
arising from sales returns
Advance payments for purchase of merchandise 300,000 300,000
Customers’ accounts reporting credit balances 40,000
arising from advance payments
Cash advances to subsidiary 800,000
Claim from insurance company 30,000 30,000
Subscription receivable due in 60 days, 600,000 600,000
Accrued interest receivable 20,000 20,000
Deposit on contract bids 500,000
Advances to stockholders (collectible in 2023) 2,000,000
TOTAL 3,100,000 950,000

Trade accounts receivable, factored (proceeds

from factoring done on a without-recourse basis 300,000
amounted to P250,000)
20% Trade notes receivable, discounted at 40%
upon receipt of the 180-day note on a without 300,000
recourse basis

Proceeds from AR factored 250,000

Carrying value of AR factored (300,000)
Loss from Factoring (50,000)

Maturity Value (Principal + Interest)

Principal 300,000
Interest (P*r%*t) 30,000 330,000
Discount (MV*d%*remaining term) (66,000)
Proceeds from NR discounted 264,000
Carrying value of NR discounted (no interest) (300,000)
Loss from Discounting (36,000)
Total Loss from Receivable Financing (86,000)
360 or 365 days?
1. Follow what the problem said.
2. If the problem is SILENT, use 360 days.
3. If you there is no answer using 360 days, then
try 365 days.
4. Pray
TRADE & OTHER
RECEIVABLES
1,550,000
750,000 assignment is just a collateral for secured borrowing and NOT CONSIDERED SALE

200,000

- Expense: Bad Debts (Write-off)

600,000

- Current Liability: Advances from Customers

300,000
- Current Liability: Advances from Customers
- Noncurrent Asset: Investment in Subsidiary
30,000
600,000
20,000
- Noncurrent Asset: Other Assets
- Noncurrent Asset: Other Assets
4,050,000
Year Current 1 – 30 31 – 60 1 – 90 More than 90 days PD
days PD days PD days PD
2019 1% 6% 9% 23% 55%
2018 2% 8% 10% 18% 60%
2017 1% 4% 11% 16% 45%
2016 3% 5% 12% 22% 45%
2015 3% 2% 8% 21% 45%

Average 2.00% 5.00% 10.00% 20.00% 50.00%

A/R 1,686,400.00 922,000.00 384,800.00 153,300.00 78,800.00

Allowance 33,728.00 46,100.00 38,480.00 30,660.00 39,400.00

Bad Debts Expense 19,368.00

Allowance for Bad Debts 19,368.00

NOTE: Amortized Cost = Net Realizable Value = Carrying Value

More than 90 days PD

TOTAL
3,225,300.00 Accounts Receivable, gross

188,368.00 Allowance for Bad Debts

3,036,932.00 Net Realizable Value

 12/31/2020
Invoice Age GL AMOUNT SL AMOUNT 0-30 31-60 61-90
Gudang 9/12/2020 111 139,200
Tisoy 12/12/2020 20 153,600 153,600
12/2/2020 30 99,200 99,200
Gusoy 11/17/2020 45 185,120 185,120
10/8/2020 85 176,000 176,000
Naning 12/8/2020 24 160,000 160,000
10/25/2020 68 44,800 44,800
8/20/2020 134 40,000
Nanong 9/27/2020 96 96,000
Balong 8/20/2020 134 71,360
Peejong 12/6/2020 26 112,000 112,000
11/29/2020 33 169,440 169,440
Unadjusted balances 1,466,720 1,446,720 524,800 354,560 220,800
Write-off of AR: Balong (71,360) (71,360)
Posting Error 11/5/2020 57 - - (99,200) 99,200
Adjusted balances 1,395,360 1,375,360 425,600 453,760 220,800
Unreconciled difference (20,000)
Adjusted balances 1,375,360
Required allowance for BD in % 2% 5% 10%
Required allowance for BD in Amount 120,320 8,512 22,688 22,080

Allow. For BD
71,360 46,720
144,960 DR Bad Debts Expense CR Allow. For BD

Allow. For BD 71,360

120,320 Accounts Receivable

Bad Debts Expense 144,960

Allow. For BD

Sales 20,000
Accounts Receivable

Write-off of AR
Unreconciled difference
Net Adjustments

Accounts Receivable
Allowance for BD
Carrying Value
91-120 >120
139,200

40,000
96,000
71,360

235,200 111,360
(71,360)

235,200 40,000

20% 50%
47,040 20,000

71,360

144,960

20,000

71,360
20,000
91,360

1,375,360
120,320
1,255,040
Principal amount: 4,000,000
Add: Origination cost 248,000
Less: Origination fees (374,000)
Initial amount / Fair value / Proceeds 3,874,000

AMORTIZATION TABLE (INITIAL)

Period Correct Int. Nominal Int. Amortization Balance
December 31, 2019 3,874,000
December 31, 2020 358,345 320,000 38,345 3,912,345
December 31, 2021 361,892 320,000 41,892 3,954,237
December 31, 2022 365,763 320,000 45,763 4,000,000

Amortized Cost (12/31/21) 3,954,237

Accrued Interest (12/31/21) 320,000
Total Receivable as of 12/31/21 4,274,237
Less: Present Value of new Future Cash Flows PV factor
Due 12/31/23 1,400,000 0.837832 1,172,965
Due 12/31/24 1,000,000 0.766895 766,895
Due 12/31/25 600,000 0.701963 421,178
Due 12/31/26 400,000 0.642529 257,012 2,618,049
Impairment Loss 1,656,188
3,400,000

AMORTIZATION TABLE (AFTER IMPAIRMENT)

Period Correct Int. Nominal Int. Amortization Principal
December 31, 2021
December 31, 2022 242,170 - 242,170 -
December 31, 2023 264,570 - 264,570 1,400,000
December 31, 2024 159,543 - 159,543 1,000,000
December 31, 2025 81,801 - 81,801 600,000
December 31, 2026 33,867 - 33,867 400,000
 Correct Interest = Interest Income Effective Interest = Interest Income
Nominal Interest = Interest Receivable

Balance
2,618,049
2,860,219
1,724,789
884,332
366,133
-
Net cash proceeds from factoring 340,000
Factors holdback 50,000
Total sales price of AR factored 390,000
Less: Carrying value of AR factored 480,000
Gain (Loss) from Factoring - 90,000

NO GAIN/LOSS on Assignment of AR because it is not a sale.

Accounts receivable - assigned 800,000

May 31 collection w/ SD - 205,000
June 30 collection w/ SD - 154,000
Sales returns - 30,000
Write-off - 20,000

Carrying Value of AR - assigned 391,000

Payment Interest Principal Balance

Loans payable - May 1 500,000
May 31 remittance 200,000 10,000 190,000 310,000
June 30 remittance 150,000 6,200 143,800 166,200

Maturity Value (Principal + Interest)

Principal 600,000
Interest (P*r%*t) 36,000 636,000
Less: Discount (MV*d%*remaining term) 10,600
Proceeds from NR discounted 625,400
Less: Carrying value of NR discounted (Principal + Int. Rec.) 624,000
Gain (Loss) from Discounting 1,400
DR Cash 200,000
DR Sales Discount 5,000
CR A/R 205,000

< remaining term: 2/6

< lapsed term: 4/6